Global Private Equity Group
Overhauling digital capabilities to improve EBITDA leads to $100M annual savings
When it comes to EBITDA, what difference does being digital really make?
Our private equity client wanted to use digital tools to enhance its view of spend across dozens of portfolio companies. The result? A $100 million reduction in operating costs through new efficiencies that went straight to the bottom line.
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Overhauling digital capabilities to improve EBITDA leads to $100M annual savings
10% - 30%
in category cost reductions for portfolio companies
500
hours saved annually per portfolio company, bringing faster results and enhanced visibility into operating costs
$100 million
annual operating cost reduction
The Challenge
Shrewd investments depend on sound data. Our client had data—lots of it across their investment portfolio. What it didn’t have was the ability to use that data efficiently to optimize processes and EBITDA. That’s where we came in.
We saw that enhancing digital capabilities could produce a better view of spending—and using that insight to improve operational efficiency by standardizing back-office functions, procurement, and supply chain approaches could accelerate portfolio company transformation.
Project Timeline
5
Weeks
Develop spend baselines. Identify common supplier and category opportunities. Outline priorities for pursuit (e.g., low-hanging fruit, longer-term initiatives).
7
Weeks
Pursue preliminary value creation initiatives. Secure quick wins. Establish PMO structure. Introduce the PE firm’s approach to portfolio companies.
10
Weeks
Drive program adoption, including migration to PE-preferred suppliers. Collaborate with portfolio companies to show value. Initiate cross-portfolio best practice identification and sharing.
10
Weeks
Develop and oversee supplier governance, update spend data, and strategize subsequent waves of cost transformation priorities.
An Undeniably Different Approach
We’ve worked with this private equity investor for years. Our deep understanding of their business and portfolio and laser focus on creating financial value ensured the spotlight was what really mattered: establishing a new level of visibility into investment EBITDA and then using that insight to significantly reduce operating expenses.
Our multidisciplinary project team brought expertise in data and digital tools, operations, strategic sourcing, and private equity value creation. During this digital overhaul, our team helped the client launch a leveraged sourcing program.
Getting this right set the foundation for a unified portfolio approach and a new level of visibility into investment EBITDA. Here's how we did it:
- Employed digital tools to improve insight into spending across the portfolio.
- Developed standards for supplier scoring, contract negotiations, and sourcing categories.
- Selected indirect and technology categories for implementing vendor selection guidelines.
- Chose KPIs and designed reporting to track portfolio sourcing performance and support value-creation discussions.
- Created how-to playbooks for portfolio companies to use to drive value creation.
- Established a program management office (PMO) to guide implementation across dozens of portfolio companies, tailored to the client’s culture and management approach.
- Fostered participation and support from portfolio companies and suppliers.
Real Results
Going digital has helped our client improve control over individual portfolio company spending decisions—ultimately saving millions in operating expenses every year and boosting EBITDA and ROI.
With powerful new digital and data capabilities, our client can demonstrate quantifiable financial and operational process value to prospective investments and investors. Additionally, adopting a unified approach across portfolio companies has led to steep cost savings—typically 10% to 30%—across of a multitude of spend categories that is up to $100 million in savings per year.
On average, their portfolio companies save more than 10,000 hours per year in procurement efforts in IT sourcing, healthcare benefits, and real estate strategy, bringing faster results and enhanced visibility into operating costs. The investor’s portfolio companies have also benefitted from new leveraged purchasing power, moving from tactical buying to strategic category management, and leveraging broader commodity knowledge across the portfolio.
